Summaries of health policy coverage from major news organizations

Financial Difficulties Forced 23 California Hospitals to Close in Late 1990s, Study Says

Between 1995 and 2000, 23 hospitals in California shut down largely, because of the "unforgiving health care climate," including low reimbursements from Medicare and private health plans, a nursing shortage, increasing numbers of uninsured patients and costs from state-mandated seismic retrofitting, according to a new University of California-Berkeley study, the Los Angeles Times reports. Of the hospitals that closed during the late 1990s, 11 were in the Los Angeles area and four were in San Diego. More than half of the closed facilities had fewer than 100 beds, and almost half were for-profit facilities (Hayasaki, Los Angeles Times, 5/10). The report, titled "California's Closed Hospitals, 1995-2000," is the first "close look" at hospital closures statewide (UC-Berkeley release, 5/9). State Attorney General Bill Lockyer (D) requested the study following a "public outcry" after two Southern California hospitals closed (AP/Sacramento Bee, 5/10). According to the study, each of the facilities experienced a decline in reimbursements and income per bed one year before closure (UC-Berkeley release, 5/9). In addition, the study found that hospitals treating larger numbers of Medi-Cal beneficiaries were "more likely to close."

Richard Scheffler, the study's lead researcher, said, "The profit margins were very low. [Hospitals] just couldn't pay their bills." He added, "Managed care firms probably stayed away from smaller hospitals. They just prefer bigger and fewer hospitals to deal with, rather than small hospitals that can't provide a large range of services" (Los Angeles Times, 5/10). Jan Emerson, spokesperson for the California Healthcare Association, said, "The reality is California's health care system is in a financial meltdown. Two of every three hospitals in the state are losing money" (AP/Sacramento Bee, 5/10). Scheffler added, "I hope that policy makers will have a sense that hospital closures are a significant concern in California" (Los Angeles Times, 5/10). To view the report, go to http://caag.state.ca.us/charities/hospitals/report.pdf.

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